saarc impact on indian economy essay

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South Asian Association for Regional Cooperation (SAARC)

SAARC stands for South Asian Association for Regional Cooperation and is an intergovernmental organization for the development of economic and regional integration. The organization has the support of different countries known as member-states.

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SAARC – Latest News

• The Ministry of External Affairs said India will supply COVID-19 vaccines to SAARC Nations under grant assistance.
• Recently SAARC member countries turned down Pakistan’s proposal to host the grouping’s pending summit meeting. 
• Indian Foreign Minister, S Jaishankar had recently noted that cross-border terrorism, obstructing trade, blocking connectivity are three key challenges that SAARC must overcome”.
• Nepal’s Foreign Minister Pradeep Gyawali had recently urged the SAARC member nations to explore all the viable options to convene the 19th summit of the eight-member regional body at an early date, underlining the need for deeper engagement to collectively fight COVID-19 and develop regional resilience to mitigate the impact of the pandemic.
• India’s proposal to launch a COVID-19 Emergency Fund was given a positive reception by SAARC nations. Within days, all the countries, except Pakistan, contributed to it voluntarily.

In Jan 2021, the Ministry of External Affairs, India announced that the indigenously manufactured COVID-19 vaccines will be supplied to key SAARC member countries in a phased manner.

The below-table gives a quick overview of some of the important points concerning the South Asian Association for Regional Cooperation (SAARC) for the IAS Exam preparation. 

The topic is important for the IAS Exam for GS-II and Essay.

SAARC – An Overview

• SAARC was founded by seven states in 1985.
• In 2005, Afghanistan requested its accession to SAARC and formally applied for membership in the same year.
• This organization was formed in Dhaka on December 8, 1985, and its secretariat is based in Kathmandu, Nepal.
• SAARC Potential future members – Turkey and Russia have also applied for SAARC membership.
• SAARC comprises of 8 member states and 9 observer states –

Know about India’s relations with SAARC nations from the articles linked below:

SAARC – Historical background

• The idea of regional cooperation in South Asia was first initiated in May 1980. The Foreign Secretaries of the then seven countries met for the first time in Colombo in April 1981. Five key areas for regional cooperation were identified and with time other important areas were added later.
• The South Asian Association for Regional Cooperation was set up when its Charter was formally adopted on 8 December 1985 by the Heads of State or Governments of India, Bangladesh, Maldives, Bhutan, Nepal, Sri Lanka, and Pakistan.

Also, learn more about the Bay of Bengal Initiative on Multi-Sectoral Technical and Economic Cooperation BIMSTEC ), a multilateral organization that is of relevance to India from a Geo-political perspective.

Also read, the gist of RSTV’s Big Picture Debate on SAARC vs. BIMSTEC in the linked article.

Areas of Cooperation Among SAARC Nations

• Agriculture and Rural Development
• Human Resource Development and Tourism
• Economic, Trade and Finance
• Social Affairs
• Environment, Natural Disasters and Biotechnology
• Education, Security and Culture and Others
• Information and Poverty Alleviation
• Energy, Transport, Science and Technology

SAARC – Objectives

The main motto of the organization is to work towards a common goal of achieving social, cultural, and economic growth for all the people within the South Asia region.

The objectives of SAARC, as defined in its charter, are as follows:

• Promote the welfare of the people of South Asia and improve their quality of life
• Accelerate economic growth, social progress, and cultural development in the region by providing all individuals the opportunity to live in dignity and realize their full potential
• Promote and strengthen collective self-reliance among the countries of South Asia
• Contribute to mutual trust, understanding and appreciation of one another’s problems
• Promote active collaboration and mutual assistance in the economic, social, cultural, technical, and scientific fields
• Strengthen cooperation with other developing countries
• Strengthen cooperation among themselves in international forums on matters of common interest; and
• Cooperate with international and regional organizations with similar aims and purposes.

SAARC Principles

Cooperation within the framework of the SAARC shall be based on:

• Respect for the principles of sovereign equality, territorial integrity, political independence, non-interference in the internal affairs of other States and mutual benefit.
• Such cooperation shall not be a substitute for bilateral and multilateral cooperation but shall complement them.
• Such cooperation shall not be inconsistent with bilateral and multilateral obligations.

SAARC – Structure

SAARC has the following structure:

• Council – It is the apex policy-making body. The council is represented by government heads of the respective member countries.
• Council of Ministers – The Council of Ministers comprises the foreign ministers and they meet generally two times annually.

Council of Ministers – Functions

• Policy formulation
• Reviewing the progress of regional cooperation
• Identifying newer areas of cooperation, and
• Setting up additional mechanisms as required

Standing Committee

It comprises the foreign secretariat of the member countries. The major functions of the standing committee are stated below:

• To monitor and coordinate the programs
• To deal with modalities of financing
• To mobilize cooperation within and outside the region

Programming Committee

It comprises senior officials of the member governments. The major functions of this committee are as follows:

• Finalizing the annual meet schedule
• Budget scrutinization
• External activities assigned by the standing committee

Technical Committee

It consists of representatives of the member nations. The major functions of the committee are as follows:

• To formulate projects and monitor the same
• To submit reports

Secretariat

It is headed by the Secretary-general appointed by the Council of Ministers. The main functions of the Secretariat are as follows:

• Coordination and execution of activities conducted by SAARC
• Monitoring the SAARC meetings
• Work as a communication link between SAARC and other international summits and forums.

SAARC – Regional Centres

Regional Centres established in Member Countries are the supporting pillars to the secretariat for promoting regional cooperation. These Regional Centres are managed by respective Governing entities comprising representatives from Member States, SAARC Secretary-General, and the Ministry of Foreign/External Affairs of the host government.

The Regional Integrated Programme of Action covers the following aspects:

• Women, Youth, and Children
• Health and Population Activities
• Science and Technology and Meteorology
• Environment and Forestry
• Human Resource Development, and

Working Groups have also been established in the following areas:

• Biotechnology
• Information and Communications Technology
• Intellectual Property Rights

Significance of SAARC

• SAARC is the world’s most densely populated region and one of the most fertile areas. It comprises 3% of the world’s area, 21% of the world’s population and 3.8% (US$2.9 trillion) of the global economy.
• SAARC countries synergize their actions as they have common traditions, dress, food and culture, and political aspects.
• The SAARC nations have problems and solutions to the problems in common such as poverty, illiteracy, malnutrition, natural disasters, internal conflicts, industrial and technological backwardness, low GDP, and poor socio-economic conditions. These nations uplift their living standards by creating common areas of development.

Importance of SAARC for India

• SAARC is a game-changer for India’s Act East Policy. It links South Asian economies with Southeast Asia which will further boost economic integration and prosperity to India mainly in the Services Sector.
• Primacy to the country’s immediate neighbours.
• Nations of SAARC help in the creation of mutual trust and peace within the region thus promoting stability.
•  SAARC can engage Nepal, Bhutan, the Maldives, and Sri Lanka in economic cooperation and development processes to counter China ( OBOR initiative ).
• SAARC offers a platform for India to showcase its leadership in the region by taking up extra responsibilities.

Achievements of SAARC

• A Free Trade Area is established by the member countries to increase their internal trade and lessen the trade gap of some states considerably. SAARC is comparatively a new organization in the global arena.
• SAARC Free Trade Agreement – SAFTA was signed to reduce customs duties of all traded goods to zero by the year 2016. The agreement was confined to goods, but excluding all services like information technology.
• South Asia Preferential Trading Agreement – SAPTA for promoting trade amongst the member countries came into effect in 1995.
• SAARC Agreement on Trade in Services – SATIS is following the GATS-plus ‘positive list’ approach for trade in services liberalization.
• SAARC University – Establish a SAARC university in India, a food bank, and also an energy reserve in Pakistan.

SAARC – Specialized Bodies

The specialized bodies are created by the member states and their structure is different from the regional centers. The management is taken care of by the representatives of the member states the Ministry of Foreign Affairs of the host government.

The different SAARC specialized bodies are given below:

• SAARC Arbitration Council (SARCO) – Pakistan
• SAARC Development Fund (SDF) – Bhutan
• South Asian University (SAU) – India
• South Asian Regional Standards Organization (SARSO) – Dhaka

A detailed description of SAARC specialized bodies is given below-

• It is an inter-governmental body having its office in Pakistan is mandated to provide a legal framework/forum within the region for fair and efficient settlement of commercial, industrial, trade, banking, investment, and such other disputes, as may be referred to it by the member states and their people.
• SDF is governed by a Board consisting of representatives from the Ministry of Finance of the Member States. The Governing Council of SDF (Finance Ministers of MSs) oversees the functioning of the Board.
• South Asian Regional Standards Organization (SARSO) has its Secretariat at Dhaka, Bangladesh.
• It was established to achieve and enhance coordination and cooperation among SAARC member states in the fields of standardization and conformity assessment and is aimed to develop harmonized Standards for the region to facilitate intra-regional trade and to have access in the global market.
• South Asian University (SAU) is an international university, located in India. Degrees and Certificates awarded by the SAU are at par with the respective Degrees and Certificates awarded by the National Universities/ Institutions.

Challenges with SAARC

• Relation between India and Pakistan escalated tensions and conflicts severely hampers the prospects of SAARC.
• The frequency of SAARC meetings is low. More engagements between member nations are required instead of biennial meetings SAARC nations should meet annually.
• The energy and resources are diverted due to the Broad area of cooperation.
• The implementation of the SAARC Free Trade Agreement has not been satisfactory.

Way Forward with SAARC

• In a region increasingly targeted by Chinese investment and loans, SAARC could be a common platform to demand more sustainable alternatives for development, or oppose trade tariffs together, or demand better terms for South Asian labour around the world.
• SAARC, as an organisation, reflects the South Asian identity of the countries, historically and contemporarily. This is a naturally made geographical identity. Equally, there is a cultural, linguistic, religious and culinary affinity that defines South Asia.
• The member countries should explore the potential of SAARC in maintaining peace and stability in the region.
• SAARC should be allowed to progress naturally and the people of South Asia, who make up a quarter of the world’s population should be offered more people-to-people contact.

Aspirants can also read about some important regional associations from the articles linked below:

• African Union
• Arab League
• Eurasian Economic Union (EEU)

Candidates can find the general pattern of the Civil Service Exam by visiting the UPSC Syllabus   page.

Relevant Links

Frequently asked questions related to SAARC

Who is the current president of saarc, what is the future of saarc, who is the founder of saarc, why is saarc important to india, what is the motto of saarc, what are the problems of saarc.

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Reinvigorating SAARC: India’s Opportunities and Challenges

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Anuradha Sajjanhar , AS Anuradha Sajjanhar Rahul Tongia , Rahul Tongia Nonresident Senior Fellow - Foreign Policy , Energy Security and Climate Initiative @DrTongia Waheguru Pal Singh Sidhu , Waheguru Pal Singh Sidhu Former Brookings Expert, Nonresident Senior Fellow, Center on International Cooperation - New York University Subir Gokarn , Subir Gokarn Former Brookings Expert - Brookings India, Executive Director - IMF Rohan Sandhu , Rohan Sandhu Senior Engagement Manager - International Innovation Corps (IIC) @Rohan_Sandhu Vikram Singh Mehta , Vikram Singh Mehta Distinguished Fellow - Centre for Social and Economic Progress Shamika Ravi , and Shamika Ravi Former Brookings Expert, Economic Advisory Council Member to the Prime Minister and Secretary - Government of India Shruti Gakhar SG Shruti Gakhar

November 20, 2014

Content from the Brookings Institution India Center is now archived . After seven years of an impactful partnership, as of September 11, 2020, Brookings India is now the Centre for Social and Economic Progress , an independent public policy institution based in India.

In the world of regional organizations the South Asian Association of Regional Cooperation (SAARC) is an unruly stepchild. With squabbling members and embarrassingly poor integration the organization has very little to show on the eve of its 30 th anniversary next year. Yet, a reinvigorated SAARC has the potential to vastly improve the lives of its 1.5 billion citizens – nearly one-fourth of all humanity – particularly the inhabitants of its largest member, India. As Prime Minister Narendra Modi – who has vigorously championed regional cooperation since coming to office – prepares for his first SAARC summit in Kathmandu on 26-27 November 2014, Brookings India focuses on areas of potential cooperation and suggests ways to translate those opportunities into outcomes.

While this might be dismissed as a counterfactual exercise – in the words of E.H. Carr, “an idle parlour game” – it does offer value in challenging long held assumptions, and exploring ways to build on existing regional cooperation and developing cooperation in new areas.

This policy brief contains 13 essays in three sections. The first section provides the overview and situates SAARC geopolitically. The following section looks at ways of further enhancing existing regional cooperation. The final section examines the prospect of initiating cooperation on new issues.

Brookings does not take institutional positions on policy issues and each essay in this briefing book solely reflects the views of the Brookings scholar(s) who authored it.

Table of Contents

( Click title to view chapter)

Reinvigorating SAARC W.P.S. Sidhu & Rohan Sandhu

Internal and External Challenges W.P.S. Sidhu & Rohan Sandhu

A Role for China in SAARC? Tanvi Madan

ENHANCING EXISTING COOPERATION

Gravity and Geography: Sub-regionalizing SAARC Trade Subir Gokarn

From Energy Crisis to Energy Sufficiency? Vikram Mehta

Building Infrastructure Collectivel y Rahul Tongia

Turning Water Challenges into Opportunities Subir Gokarn & Anuradha Sajjanhar

Developing SAARC’s Higher Education Potential Shamika Ravi

EXPLORING NEW OPPORTUNITIES

Climate change imperatives for regional cooperation Subir Gokarn

SAARC and India’s Healthcare Opportunities Shamika Ravi

Can SAARC Counter the Al Qaeda Threat? Bruce Riedel

Military Co-operation: Mission Impossible? W.P.S. Sidhu & Shruti Gakhar

Cooperation in Outer Space: SAARC’s Constellation of Stars? W.P.S. Sidhu

Related Content

Waheguru Pal Singh Sidhu, Vikram Singh Mehta, Teresita C. Schaffer, Tanvi Madan, Stephen P. Cohen, Charles K. Ebinger, Bruce Riedel, Cheng Li, David Dollar, Eswar Prasad, Subir Gokarn, Shamika Ravi, Urvashi Sahni, Michael E. O’Hanlon, Robert Einhorn, Rahul Tongia, Amy Liu, Robert Puentes

January 20, 2015

Tanvi Madan, Strobe Talbott, W.P.S. Sidhu, Richard C. Bush, Mireya Solís, Martin Indyk, Javier Solana, Bruce Riedel, Michael E. O’Hanlon, Teresita C. Schaffer, Stephen P. Cohen, Robert J. Einhorn, Ian Wallace, Joshua P. Meltzer, Eswar Prasad, Neil G. Ruiz, Subir Gokarn, Homi Kharas, Vikram Singh Mehta, Charles K. Ebinger, Tim Boersma, Rahul Tongia, William J. Antholis, Kavita Patel, Shamika Ravi, Bruce Jones

September 20, 2014

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July 9, 2015

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By actively engaging in SAARC, India can promote economic opportunities, stability, connectivity, and regional cooperation, ultimately benefiting not only India but the entire South Asian region. Critically Analyse.

Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

2. By actively engaging in SAARC, India can promote economic opportunities, stability, connectivity, and regional cooperation, ultimately benefiting not only India but the entire South Asian region. Critically Analyse. (250 words)

Difficulty level: Moderate

Reference: Insights on India

Why the question: The question is part of the static syllabus of General studies paper – 1. Key Demand of the question: To write about the future of SAARC amidst current uncertainties and to argue for its revival. Directive word:  Critically analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and present them in a summary. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a balanced judgment on the topic. Structure of the answer: Introduction:  Begin by giving context of SAARC and its present-day scenario. Body: In the first part, bring out the current uncertainties which forebode a bleak future for SAARC – Crisis in Afghanistan, Myanmar, Indo-Pak equation, Covid crisis etc. Next, mention as to why India should take the lead in reviving SAARC. It will ensure integrated, connected, secure and prosperous South Asia, and lead economic, technological, cultural, and social development’ of the region. Conclusion: Conclude with a way forward and diplomatic steps needed to re-engage and revive SAARC.

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Essay on SAARC | Trade Organisations | International Economics

Here is an essay on ‘SAARC’ for class 9, 10, 11 and 12. Find paragraphs, long and short essays on ‘SAARC’ especially written for school and college students.

Essay on SAARC

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Essay # 1. Introduction to SAARC:

This association was formed by the South Asian countries including India, Bangladesh, Pakistan, and Nepal. Bhutan, Sri Lanka and Maldives in December, 1985. Afghanistan joined as the eighth member of the Association at the 14th SAARC summit held in New Delhi in April 2007. The status of observer has been accorded to the USA, EU, China, Japan, South Korea, Iran, Australia and Myanmar.

The 16th Summit of SAARC was held in Thimpu, Bhutan in April 2010. A positive development from this meet was that eight member states arrived at an agreement on trade in services that was stated to accelerate regional collaboration in diverse areas like communications, computer and information services, air transport, health and hospitality.

The 17th SAARC Summit was held in Addu, Maldives in November 2011. This meet emphasised upon the need to intensify efforts to fully and effectively implement the South Asian Free Trade Area (SAFTA) agreement on reduction in sensitive lists as well as early resolution of non-tariff barriers. Other issues on which member countries could agree were greater flow of financial capital and intra- regional long term investment, conclusion of Regional Railway Agreement and conclusion of agreement for energy co-operation.

The 18th SAARC Summit was held in Kathmandu, Nepal in November 2014. Although member countries re-emphasised upon the regional co-operation and collaboration, yet the necessary commitments were lacking. The only saving grace was in the field of sub-regional connectivity. In June 2015, India, Bangladesh, Bhutan and Nepal entered into an agreement to promote sub-regional road development network through these countries.

Essay # 2. Objectives and Principles of SAARC:

The SAARC has placed before it the basic goal of rapid economic and social development of the countries of the region through the optimum utilisation of the collective material and human resources.

Objectives:

The objectives of the Association, as specified in the Article I of the Charter of the SAARC are as under:

(1) Promotion of the welfare of the people of South Asia and improvement in the quality of their life.

(2) Acceleration of economic growth, social progress and cultural development in the region and provision for all individuals the opportunity to live in dignity and to realise their full potentials.

(3) Promotion and strengthening of collective self-reliance among the countries of South Asia.

(4) Making of contribution to mutual trust, understanding and appreciation of each other’s problems.

(5) Promotion of active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields.

(6) Strengthening of co-operation with other developing countries.

(7) Strengthening of co-operation among themselves in international forums on the matters of common interest.

(8) Promotion of co-operation with international and regional organisations with similar aims and purposes.

Principles:

The Article II of the SAARC Charter has spelled out the following principles:

(i) Co-operation within the framework of Association shall be based upon the respect for the principles of sovereign equality, territorial integrity, political independence, non-interference in the internal affairs of other states and mutual benefit.

(ii) The co-operation among the members of the Association shall not be a substitute for bilateral and multilateral co-operation but shall be complementary to them.

(iii) The co-operation among the member nations shall not be inconsistent with bilateral and multilateral obligations.

Essay # 3. Organisation of SAARC:

The organisation of SAARC is comprised of the Summit, SAARC Secretariat, and Council of Ministers, Standing Committee, Programming Committee and Technical Committees.

The summit is the highest policy making authority of the Association constituted by the heads of all the member countries. The summit called as the council meets almost every year in member countries on a rotational basis. If even one of the heads of member states cannot attend the meeting, it is not possible to hold the meeting of the council.

The SAARC Secretariat, co-ordinates and monitors the execution of the activities of SAARC, services the meetings and serves as the channel of communication between SAARC and other international organisations. It was set up at Kathmandu (Nepal) on January 16, 1987. The SAARC secretariat is headed by the Secretary-General, who is appointed by the Council of Ministers upon nomination by a member state on the principle of rotation in the alphabetical order for a fixed period of 3 years.

Apart from the Secretary General, the secretariat includes also eight Directors, one from each state and the general services staff. The directors are appointed by the Secretary General upon nomination by member states for a period of three years. The term of the directors can be extended, in special circumstances by another three years by The Secretary General, in consultation with the concerned member states.

Nepal bore the initial cost of the establishment of the Secretariat. The recurring expenditures on SAARC are shared among the member countries. India contributes 32 percent of the total expenditure followed by Pakistan that contributes 25 percent of it. Bangladesh, Nepal and Sri Lanka each accounts for 11 percent and Bhutan and Maldives each accounts for 5 percent of it.

There is also the Council of Ministers which is constituted by the Foreign Ministers of all the member states of SAARC. The council of ministers is entrusted with the responsibilities to formulate policies, to review progress, to decide on further areas of co-operation, to establish additional mechanisms as deemed necessary and to decide on other matters of general interest of the Association. The meeting of the Council of Ministers in held twice a year. It may have an extra-ordinary session, if all the members’ states agree to do so.

The SAARC organisaiton, in addition, includes a Standing Committee, a Programme Committee and Technical Committees. The Standing Committee is constituted by the foreign secretaries of the member states. Its responsibilities are to monitor and co­ordinate programmes, to work out modalities of their financing, to determine intersectoral priorities, and to mobilise regional and external co-operation. This committee normally meets twice a year and submits its report to the Council of Ministers.

The standing committee can institute action committees for the implementation of projects comprised of more than two member countries. All the member countries may not have the representation on it.

In order to assist the standing committee, there is a Programme Committee comprised of senior officials. It is an adhoc body and meets prior to the sessions of the standing committee. It is entrusted with the tasks of the scrutiny of budget of the secretariat, to finalise the annual schedule of its activities, to deliberate upon any other matters assigned by the standing committee, to consider the reports of the technical committees and SAARC Regional Centres and to submit its comments to the standing committee.

There are at present 12 Technical Committees related to agriculture, rural development, environment, health, population activities, transport, communications, science and technology, tourism etc. These committees include the representatives of all member states. They prepare programmes and projects in their respective areas.

They monitor and execute the activities in their fields and submit reports to the standing committee through the Programming Committee. There is rotation of chairmanship of every technical committee among the member countries in the alphabetical order every two years.

Essay # 4. Appraisal of the SAARC :

SAARC is the trade organisation which is being structured by some very poor countries of the world primarily directed to accelerate the economic and social development of the South Asia. Four of the member countries of SAARC-Bangladesh, Bhutan, Maldives and Nepal are included in the least developed countries. Bhutan, Nepal and Afghanistan are land-locked countries. They can have access to the world market through the ports of India and Bangladesh. Pakistan is reluctant to provide transport facilities to Afghanistan.

India’s trade with SAARC countries has gone up from $ 6.9 billion in 2005-06 to $ 19.98 billion in 2013-14. The intra-regional trade of these countries is only 5 percent of the total trade of SAARC nations. It is clear that there is much potential for expanding the intra-regional trade among these countries.

According to some studies, the potential for regional trade is to grow upto $ 120-180 billion, provided the member countries can work out a full-fledged FTA on goods and services and create necessary infrastructure and connectivity.

According to Centre for Global Trade Development (CGTD) Report, the South Asian Preferential Trading Arrangement will give access to a consumer base of over 425 million people in the middle class bracket and permit the accelerated expansion of the growing points of the economies of all the countries in the region.

With imports of India as 8 percent of her GDP, 34 percent in Sri Lanka and 17 percent in Pakistan, Bangladesh and Nepal, the intra-regional trade-creation and trade- diversion effects will certainly unfold great prospects for the development of the entire region. It is expected that the combined average growth rate of 7 percent per annum would be realised.

Essay # 5. Achievements of SAARC:

Although SAARC has remained besieged with serious political problems since its inceptions yet it could register some achievements that are as under:

(i) Removal of Trade Restrictions:

The member countries have undertaken some steps in the direction of reducing quantitative restrictions on imports from one another and granted some measure of concessions on trade. From August 1998, India removed quantitative restrictions off about 2300 items of import from member countries.

Upto August, 2003, India had permitted concessions to Pakistan on about 370 items. Pakistan, by that time, had allowed concessions on import of about 340 items to India. The free trade agreements have been negotiated by India with Bhutan, Nepal and Sri Lanka.

(ii) Institution of Technical Committees:

In order to promote co-operation among the member countries in the fields of agriculture, rural development, environment, health, communications, science and technology, transport, tourism, education and culture, the technical committees for economic co-operation have been instituted.

(iii) Poverty-Alleviation Programme:

SAARC has adopted the strategy of social mobilisation, decentralised agricultural development, small labour- intensive industries and human development. The priority has been given to the right to work and extension of primary education for the poor. SAARC has created a three-tier mechanism for exchange of information among member countries on poverty alleviation programme. In this connection, it has received co-operation from IBRD, UNDP and ESCAP.

(iv) SAARC Funds:

In order to render financial assistance to the member countries, SAARC has instituted two funds-South Asian Development Fund (SADF) and SAARC Japan Special Fund (SJSF). The SADF has three windows-window for identification of development project, window for institutional and human resource development and window for social and infrastructural development.

(v) SAARC Food Security:

The SAARC has set up the SAARC Food Security Board for making a periodic review of the food situation in the region. A reserve of 2.42 lakh tonnes of foodgrains has been created to tide over any emergency in the member states. SAARC expressed its intention to set up regional food bank to meet shortages and losses caused by natural calamities such as floods and droughts at the 14th SAARC summit held in New Delhi in April, 2007.

(vi) SAARC Chamber of Commerce and Industry:

A SAARC Chamber of Commerce and Industry (SCCI) have been instituted with its headquarters in Karachi. It has the aim to promote trade and interaction of chambers of commerce and industry of seven member countries, to organise trade fairs and to negotiate with other trade organisations for the expansion of intra-regional trade. The SCCI has played an important role in the formation of SAPTA and promoting economic and trade co-operation in the region.

(vii) SAARC Agricultural Information Centre (SAIC):

It was established in 1998 and acts as a central information institution on agriculture-related activities like forestry, fishery, rice, potato, live­stock etc. It assists in the exchange of information among the seven member countries also about R & D activities. The information about research and experiments related to agriculture is published by SAIC and distributed among the member nations.

(viii) Agreements with International Organisations:

For facilitating the social and economic development of SAARC countries, the memorandum of understanding have been signed with various international organisations including UNCTAD, UNDP, UNDCP, ESCAP, ITU and Asia Pacific Telecommunity (APT) etc.

(ix) Formation of South Asian Growth Quadrangle (SAGQ):

In early 2000, India, Bhutan, Nepal and Bangladesh formed the South Asian Growth Quadrangle with the aim of the development of Nepal, Bhutan, Bangladesh and Eastern India and the basin of the rivers Ganga, Meghna and Brahmaputra. The countries of this area will co­operate in the fields of multi-nodal transport and telecommunications, effective use of tourism, protection from environmental hazards and increase in trade and investments.

(x) Bilateral Free Trade Agreements:

In order to move towards the creation of South Asian Free Trade Area (SAFTA), some of the countries of the region have forged the bilateral free trade area agreements. A major development in this regard has been the signing of the agreement between India and Sri Lanka on December 28, 1998. Under this agreement, India shall permit the import of 1000 items on zero duty from Sri Lanka and the latter shall permit the duty free import of 900 items. Similar agreements have also been forged by India also with Bhutan and Nepal.

Essay # 6. Problems Faced by SAARC :

Although SAARC has attempted to move forward over the years, yet it has been faced with very serious problems and so far it has not been able to play its assigned role.

These problems are as under:

(i) Political, Ethnic and Religions Disputes:

The major barrier to the co-operation among the member countries of SAARC has been long-drawn political, ethnic and religious disputes among the member countries. Pakistan has been insisting over the years that co-operation in trade and other matters of social and economic development, cannot be possible unless India hands over its state of Jammu & Kashmir to it.

(ii) Lack of Complementarity:

The member countries of SAARC mostly produce same type of products. The successful integration requires dissimilarity in production rather than similarity. Lack of complementarity in the economies of these countries is having restrictive effect upon the co­operation among them.

(iii) Preference to Trade with Hard Currency Areas:

Some of the member countries of SAARC prefer to enlarge their exports to hard currency areas. As a result, the promotion of intra-regional trade among the SAARC countries has remained generally neglected.

(iv) Deficit in Balance of Payments:

The countries of SAARC including India are faced with the problem of persistent BOP deficit and consequent shortage of foreign exchange. They generally have an inclination to restrict imports and impose tariff and other restrictions rather than abolishing them.

(v) Competition among Themselves:

There is competition among some of the member countries in the export of certain products in the international market. For instance, India and Sri Lanka compete in respect of tea. India and Pakistan do so in respect of textiles and clothing. There is competition between India and Bangladesh in respect of Jute and textiles. Such a state of affairs tends to discourage co-operation among them.

(vi) Infra-Structural Inadequacies:

There is a lack of proper development of transport, communications, institutional arrangements as well as payment and clearing arrangements in the region. That is a major impediment in the expansion of intra-regional trade among the member countries.

(vii) Big Brother Complex:

In view of large geographical area and natural, financial, technical and manpower resources, the countries like Pakistan and Bangladesh look at India as big brother who will over-swamp their markets with her products. India is conscious of such complex among the member countries of SAARC and has been constrained from extending fuller co-operation in the economic and social development of other countries of the region.

(viii) Low Intra-Regional Investment:

The member countries of SAARC look to the West and international lending agencies for capital resources and are afraid of seeking investments from India due to irrational reasons. The intra-regional investment is only 1 percent of total investment in the region.

In contrast, 43 percent of ASEAN investment and 64 percent of EU investment is intra-regional. The increase in intra-regional investment by the investors of the member countries will certainly enhance greater co-operation among member countries of SAARC in the diverse areas.

(ix) Bilateral Preferential Arrangements:

Some member countries of SAARC have entered into bilateral agreements with one another for extending trade concessions. In some cases, these concessions are even more than those assured under SAPTA. Consequently, there is no added attraction for member countries to await indefinitely the outcome of SAPTA.

(x) Product by Product Approach:

The lack of progress in SAARC negotiations so far has been on account of the product by product approach of the member countries in the matter of granting trade concessions. Some of the products included in the lists for trade concessions are actually not traded among the member countries.

The move towards the creation of South Asian Free Trade Area (SAFTA) can make headway only if the countries adopt a more wide sector-based rather than product-based approach in the extension of trade concessions.

(xi) Transport Problems:

Even though there is technical committee on transport, created by the member countries, yet the transport facilities are still less developed. The transit duties are also quite high. It is a major impediment in the creation of SAFTA.

(xii) Trade Barriers:

Despite the protracted trade negotiations among the member countries, there are still high tariffs on several commodities. Pakistan and Bangladesh impose VAT on all imported goods. All the member countries continue to levy non-tariff barriers such- as quantitative restrictions, restrictive licenses etc.

Pakistan has not yet granted Most Favoured Nation (MFN) status to India, despite the fact that it was obligatory to do so under the WTO Agreement by the year 2005. Unless the countries become willing to dismantle the trade barriers, the avowed goal of creating SAFTA will remain a mirage.

Essay # 7. South Asian Free Trade Area (SAFTA):

A major breakthrough has been, however, achieved by the SAARC countries at their 12th Summit held at Islamabad (Pakistan) between 4th to 6th January, 2004. The member countries signed an agreement to create South Asian Free Trade Area (SAFTA) with effect from January 1, 2006.

After the ratification of SAFTA agreement it became operational on July 1, 2006. This agreement stipulated that all the trade barriers between the member countries would be removed by 2016. For the tariff phase-out, the applied rate of customs duty applicable on January 1, 2000 would be taken as base. India applied duty reduction with the average reduction standing at 5 percentage points per year for most of the products covered under the peak duty rate.

The member countries agreed to issue notification related to the ‘negative lists’ or ‘sensitive lists’. They contained the products which were not open for tariff concessions. As per the negative lists announced by the countries, Nepal had 1310 items, Bangladesh 1254 items, Pakistan 1183 items, Sri Lanka 1065, India 884, Maldives 671 and Bhutan 157 items on that list.

The ‘sensitive list’ prepared by India includes, agricultural products, textiles, chemicals, leather and the products reserved for small scale industries. The least developed countries, like Bangladesh would be allowed to export some of those items to India under concessional terms.

Under the SAFTA agreement, the member countries will accord ‘Most Favoured Nation’ (MFN) status to one another. Pakistan has adopted a negative attitude as it refused MFN status to India, unless the political issue of Kashmir is settled in favour of that country. Despite that attitude, India decided to give MFN status to Pakistan. Pakistan is still hesitant in according the MFN status to India.

There is assurance from that country to comply with this regulation by the close of 2012. Meanwhile India has declared a negative list for trade with that country. It means Pakistan can import over 5600 items from India. In March 2012, Pakistan too declared the negative list for trade with India. Under that declaration, all products except 1209 items could be imported by India from that country. Thus there seems to be at last some light at the end of dark tunnel.

SAFTA has also made the provision for compensating LDC’s for the national import duty loss they may suffer on account of tariff cuts. It will benefit Bangladesh, Nepal, Bhutan and Maldives. The compensation would be subject to a cap of 1 percent in the first and second year, 5 percent in the third year and 3 percent in the fourth year, with customs revenues collected on non-sensitive items under bilateral trade in 2000 as the base.

Although compensation would be available to less developed countries for four years, Maldives will have the benefit for additional two years.

If SAFTA is implemented as it was intended to be, it can realise the full potential of trade among the member countries of this organisation.

The progress of SAARC is very disappointing. Despite the region being afflicted by terrorism, the member countries have failed to create a system of intelligence sharing. There is no co-ordination on counter-terrorism. Convention on legal assistance was although signed in August 2008, yet it has not been ratified by any member country. The implementation of SAPTA and SAFTA has been so far only half-hearted.

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Paul Krugman

Are immigrants the secret to america’s economic success.

By Paul Krugman

Opinion Columnist

When we accuse a politician of dehumanizing some ethnic group, we’re usually being metaphorical. The other day, however, Donald Trump said it straight out : Some migrants are “not people, in my opinion.”

Well, in my opinion, they are people. I’d still say that even if the migrant crime wave Trump and his allies harp on were real, and not a figment of their imagination (violent crime has in fact been plummeting in many cities). And I’d say it even if there weren’t growing evidence that immigration is helping the U.S. economy — indeed, that it may be a major reason for our surprising economic success.

But as it happens, there is a lot of evidence to that effect.

Some background here: When Covid struck, there were widespread concerns that it might lead to long-term economic “ scarring .” Millions of workers were laid off; how many of them would either depart the labor force permanently or lose valuable skills? Investment and new business formation fell. It seemed plausible that even after the worst of the pandemic was behind us, America would have a smaller, less productive work force than previously expected.

None of that happened. If we compare the current state of the U.S. economy with Congressional Budget Office projections made just before the pandemic, we find that real G.D.P. has risen by about a percentage point more than expected, while employment exceeds its projected level by 2.9 million workers.

How did we do that? American workers and businesses turned out to be more resilient and adaptable than they were given credit for. Also, our policymakers didn’t make the mistakes that followed the 2008 financial crisis, when an underpowered fiscal stimulus was followed by a premature turn to austerity that delayed a full recovery for many years. Instead, the Biden administration went big on spending, probably contributing to a temporary burst of inflation but also helping to ensure rapid recovery — and at this point the inflation has largely faded away while the recovery remains.

Beyond that, the very surge in immigration that has nativists so upset has played a big role in increasing the economy’s potential.

The budget office recently upgraded its medium-term economic projections, largely because it believes that increased immigration will add to the work force. It estimates that the immigration surge will add about 2 percent to real G.D.P. by 2034.

But are immigrants taking jobs away from native-born Americans? No. A recent analysis by Goldman Sachs contains this really interesting chart:

In case you’re wondering, “SA by GS” refers to the fact that official data aren’t adjusted for seasonal fluctuations, so Goldman Sachs has done its own seasonal adjustment.

This chart shows no rise in native-born unemployment during the immigration surge. It does show a rise in foreign-born unemployment, which I’ll come back to. But for now let’s just note that there is no good evidence that immigrants are taking away jobs from workers born in America.

Still, doesn’t immigration put downward pressure on wages? That sounds as if it could be true — in particular, you might think that immigrants with relatively little formal education compete with less educated native-born workers. I used to believe this myself.

But many (although not all) academic studies find that immigration has little effect on the wages of native-born workers, even when those workers have similar education levels. Instead of being substitutes for native-born workers, immigrants often seem to complement them, bringing different skills and concentrating in different occupations.

In some ways the current immigration surge, probably consisting mainly of less educated workers (especially among the undocumented), is a test case. Have wages for lower-wage workers declined? On the contrary, what we’ve seen recently is a surprising move toward wage equality, with big gains at the bottom :

Overall, then, immigration appears to have been a big plus for U.S. economic growth, among other things expanding our productive capacity in a way that reduced the inflationary impact of Biden’s spending programs.

It’s also important to realize that immigration, if it continues (and if a future Trump administration doesn’t round up millions of people for deportation), will help pay for Social Security and Medicare. C.B.O. expects 91 percent of adult immigrants between 2022 and 2034 to be under 55, compared with 62 percent for the overall population. That means a substantial number of additional workers paying into the system without collecting retirement benefits for many years.

Finally, let me return to that Goldman Sachs chart on unemployment rates, which shows no rise in unemployment among the native-born but a significant rise among the foreign-born. Believe it or not, that’s probably good news.

Goldman argues that the rise in foreign-born unemployment reflects a longstanding tendency for recent immigrants to have relatively high unemployment, presumably because it takes some time for many of them to get settled into sustained employment; unemployment is much lower among immigrants who have been here three years or more.

Why is this probably good news? The overall U.S. unemployment rate has crept up recently — not enough to trigger the Sahm rule , which links rising unemployment to recessions, but enough to make me and others a bit nervous .

Goldman argues, however, that this time is different. All of the rise in unemployment is among foreign-born workers — and this, they suggest, means that we aren’t seeing the kind of weakening in demand for labor that presages recessions. What we’re seeing instead, they argue, is an increase in labor supply, with many of the new workers taking some time to find their feet. If so, the Sahm rule, which has been spectacularly successful in the past, may currently be misleading.

I hope they’re right.

The bottom line is that while America’s immigration system is dysfunctional and really needs more resources — resources it would be getting if Republicans, pushed by Trump, hadn’t turned their backs on a bill they helped devise — the recent surge in immigration has actually been good for the economy so far, and gives us reason to be more optimistic about the future.

A summary of that Goldman Sachs study.

Another time dark-skinned immigrants (that is, Italians) were accused of fostering violent crime .

There are more bad economists — in the sense of being bad people — than I would ever have suspected.

New business creation is surging .

Facing the Music

“Dune: Part Two” is terrific, but I wanted more Sardaukar chanting .

Paul Krugman has been an Opinion columnist since 2000 and is also a distinguished professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @ PaulKrugman